Stocks at highs, but pros question catalyst

Though the Dow Jones industrial average and S&P 500 index closed at record highs Tuesday, some professional traders questioned whether the gains are healthy, especially considering IBM gave the blue chips its biggest boost with its stock buyback announcement.

"You have this market that just continues to make new highs every day. If it's going to take, you know, a company that's expected to have 8-, 9-percent EPS growth, flat sales growth, for the next few years. If it's going to take buybacks and dividends to get this thing going to that next leg, maybe it's 1,800 in the S&P, it just doesn't feel that healthy to me," said Dan Nathan, co-founder and editor of RiskReversal.com.

Whether by excess cash on corporate balance sheets or the Federal Reserve's easy money program, there's no question the market has been "induced" and is not rallying on its own, options trader Jon Najarian said.

In turn, investors are finally getting off the sidelines and getting back into the market, he said.

There has been a major psychological shift among investors over the past 18 months, said Josh Brown, a wealth manager with Fusion Analytics, who manages roughly $400 million in assets.

"We were so concerned the retail investor is not in. They're not coming back. Nobody's excited. Now it's the opposite," Brown said. "We're worried if animal spirits have gotten this tape ahead of itself. The pendulum always does that."